Celsius plans to convert alts to Bitcoin and Ether as part of a reorganization.

The defunct cryptocurrency lender, Celsius, has updated its bankruptcy filing and is now waiting for approval from a bankruptcy court in New York. This comes after a successful acquisition deal with the Fahrenheit crypto consortium. The company filed its reorganization plan on June 15th.

The updated plan states that Celsius will convert all altcoins from customers, with the exception of “Custody and Withhold accounts,” to Bitcoin (BTC) and Ether (ETH) starting from July 1st.

Celsius will be selling all altcoins from all customers (except Custody and Withhold accounts) starting July 1st and will be converting them into Bitcoin and Ethereum.

— Celsians (@CelsiansNetwork) June 15, 2023

The new reorganization plan proposes to deal with the claims of retail borrowers through the set off treatment. This term refers to comparing losses against profits in a given year. Losses that are not offset against income can be carried over and offset against income in later years. A Twitter user explained how the set off treatment would work for borrowers depending on the portion of the loan they have returned.

In your example, the customer took a $25k loan secured by 2 #BTC — let’s say the customer has paid 20% back and thus has $20k outstanding principal. If the set-off counts the BTC at 7/13/22 prices, the collateral would be valued at about $40k. Subtract the $20k principal from… pic.twitter.com/ZCKC1xYegm

— Cam Crews (@camcrews) June 10, 2023

David Adler from the law firm McCarter & English tweeted that the restructuring proposal by Celsius could face opposition from borrowers. He noted that the company is demanding repayment of loans, yet it has no intention of fulfilling its contractual obligations, such as returning the collateral to the borrowers. This could be something borrowers would object to, he added.

“This proposed ‘treatment’ violates every consumer lending law out there (state, federal) and the ad hoc Borrower group will be opposing this plan.”

Celsius has also asked for permission to appoint Chris Ferraro as the foreign representative in connection with a British court’s Cross-Border Insolvency Regulations in the United Kingdom. In this way, the company’s U.K. assets would be safeguarded, and the United States Chapter 11 would be acknowledged as the “foreign main proceedings” to organize a global resolution.

On May 25th, the Fahrenheit crypto consortium, which comprises venture capital firm Arrington Capital and miner US Bitcoin Corp, won the bid to acquire Celsius assets. At the time, Celsius assets were estimated to be worth roughly $2 billion. Under the new deal, the new company is expected to receive about $450–500 million worth of liquid cryptocurrency, while US Bitcoin Corp plans to construct a 100-megawatt Bitcoin (BTC) mining plant.

Celsius paused withdrawals on June 13th, 2022, after the firm became entangled in bad investments and crypto contagion following the collapse of the Terra ecosystem.

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